Selling Your Electrical Business in Florida? How to Get Top Dollar in a Competitive Market

Florida is currently one of the top states with a booming trade industry. With rapid population growth, big projects across multiple cities, and infrastructure improvements, electrical companies are in high demand statewide.

If you’ve been quietly building your successful electrical business over the years, you’re now sitting on an extremely valuable asset that can command top dollar.

But selling is more than just listing the business and waiting for the bids to come in. You used strategy and knowledge to build the business, and when it comes to selling, it’s no different.

This article will take you through the steps to achieve the highest possible price when selling your electrical business in Florida.

Key Factors That Affect the Value of Your Electrical Business in Florida

On the surface, business valuations may seem somewhat arbitrary. An investor or group examines a business and then produces a number out of thin air. But smart buyers use definitive guidelines to develop their bid. When you understand what these smart buyers base their valuations on, you can optimize your own business to highlight its true value in the eyes of buyers.

Ensuring Clean Books and Accurate Records

Financial records will always form the foundation of any business valuation, especially in service businesses with a track record. Top-line numbers may seem obvious, but buyers will look for signs that show cracks in that foundation, even if total revenue or other numbers look strong on the surface.

For starters, the last 3 years of records, including profit and loss statements, balance sheets, and tax returns, should be meticulously compiled. Ensuring these records are accurate and up to date will make the process much smoother and save time.

Buyers also look closely at:

• Gross margins and how they’ve changed over time
• Revenue type and concentration (i.e. , new construction vs service and how dependent the business is on a few major clients)
• Expenses such as payroll and subcontractor costs relative to industry benchmarks

In Florida, buyers are going to look at how you navigate seasonal fluctuations and how well-positioned the business is to deal with surges and then slower periods. Any drastic changes in revenue during specific periods could indicate a lack of customer or revenue diversity.

Optimizing your financials to quell buyer concerns allows you to set your bid higher and will often prevent buyers from counteroffering with low bids. Smart and well-funded buyers don’t mind paying a business’s true value, but they have to see the value first.

Operational Considerations

Operational considerations are one of the areas that electrical business owners tend to overlook. Owners who are closely tied to day-to-day operations sometimes miss how integral they are to running the business.

If you’re the only estimator, primary client relationship manager, and the technical problem-solver, buyers see risk.

Buyers don’t like this type of dependence on the owner, and it can make the business less valuable overall. Buyers want to be able to buy the business and keep operations running smoothly with minimal input.

This means your operations should be as stand-alone as possible. Systems, employees, and procedures should all be self-contained and independently operating facets of the business.

Low turnover is also a key consideration for buyers. In Florida, the labor market is tight, especially for the trades. If you have low turnover, you want to highlight this and show that your business won’t have staffing issues as soon as the new owner takes over.

Legal Matters

Legal exposure or ambiguity can be a serious deal-killer. These may be lurking in your business, and you may not be aware of them.

Specifically, the language of contracts should allow for transferring to new owners. If this isn’t possible, it can reduce the value of those contracts.

Any active or pending lawsuits should be addressed or disclosed upfront. Failing to do so can create doubt in the minds of potential buyers and lower the perceived value of your business.

Make sure your Florida state and local business licenses are current. This includes not just your electrical contractor license but also county occupational licenses, local business tax receipts, and specialty permits.

Any legal question marks can allow buyers to start reducing their offer, which is what we want to avoid. So tend to these matters now to optimize the sales process.

How to Attract the Right Buyers for Your Electrical Business

Buyers ultimately want zero risk. Of course, zero risk is impossible in any venture. But the closer a buyer can get to zero risk, the higher the offer and the likelihood of a quick sale that makes both parties happy.

Your optimum buyers will fall into three categories, and each will be looking at specific facets of your Florida electrical business.

Strategic Buyers – These are other electrical businesses looking to scale and expand their own business through acquisition. These buyers understand the local market, and they’ll pay a premium for things like your customer and contract backlog that give them the expansion opportunities they’re looking for.

Operationally, these buyers are looking for synergies with their own business, which is something you can highlight when preparing your business for sale.

Financial Buyers – This is a fast-growing segment, and it includes private equity groups that buy local service businesses involved in the trades. Financial buyers are making waves in the Florida market, and because of their financial resources, they’re often paying top dollar for the right businesses. Many times, financial buyers may already own companies in the same space and as a result share some of the characteristics of a strategic buyer.

These are the most financially savvy buyers, and their focus will be on operational facets as well as being highly focused on financials.

Independent Buyers – These are often other electricians or individuals who are looking to transition into ownership. They aren’t as well-funded, so these buyers will typically look for smaller businesses and creative deal structures.

Understanding Buyer Expectations and Negotiating for Maximum Value

Buyer expectations will be partially based on the size of your business and who is looking to acquire you. Large electrical companies will likely attract other electrical businesses as well as private equity interest.

Smaller businesses will mostly attract local entrepreneurs as buyers, although other electrical companies are also potential buyers.

The key is to optimize your business to appeal to your specific buyers.

That might include showcasing:

• Multi-year client relationships in Florida’s growing regions
• High-margin specialty work
• Low owner dependence
• Stable year-over-year growth, even during market fluctuations
• Diversified clients and revenue

For negotiations, you want to be able to defend your asking price. Having proper documentation is key, but so is understanding the various deal structures involved in an acquisition. This includes cash deals, financing, or earnouts.

Negotiations can make or break a sale, and having the experience can make all the difference at this critical stage. Working with an expert business broker can help you optimize your business for a sale while also attracting the highest possible bids.

At Buehler Business Brokers, our experts have helped thousands of businesses prepare, list, and sell their businesses for top dollar. Contact Buehler Business Broker today for a free consultation to learn more about selling your electrical business in Florida.